Rapid growth and global warming

The Platinum Age is an economist's description of recent economic growth - stronger than the "Golden Age" of the 50s and 60s.

While strong economic growth is good in many ways - including crucially lifting hundreds of millions of people out of poverty - the close relation of economic growth, CO2 emissions and global warming is a very inconvenient problem.

Growth has been far faster than anticipated, and so CO2 emissions and global warming have increased faster than anyone expected.

Some time ago we recommended serious action in mitigation on the basis of the precautionary principle. “The consequences if we worry and take action about global warming will be minor if we are wrong. If we do not take action and we are wrong, the consequences will be devastating.”

Professor Ross Garnaut is providing a thorough evaluation of the risks of climate change and of policies to mitigate the threat.

In a wide-ranging discussion last week, Garnaut concluded as follows.

"There are several ways in which climate change could end the Platinum Age.

“Climate change itself could seriously disrupt economic life and political stability in some major economies, to an extent that undermined the foundations of sustained, rapid, internationally-oriented growth.

“On the scenarios defined by the IPCC that have drawn most attention, the main impacts of inadequately mitigated climate change would come after the completion of most of the Chinese transition to a developed economy; but there are large statistical variations above and below the central expectations, and the business-as-usual rate of growth in emissions is and is likely to be far more rapid than assumed in the standard projections. The odds are higher that climate change itself would disrupt the extension of high living standards to other parts of the developing world after the substantial completion of the Chinese transition.

”Major shocks can affect economic activity beyond the immediate and direct economic impacts.

“The effects of the 1890s depression in eastern Australia, and of the global depression of the early 1930s, were magnified many times by the changes in attitudes to economic institutions and policies that emerged from them. The financial crisis in Indonesia in 1997 and early 1998 was converted into a catastrophic decline in output and incomes by its interaction with a fragile political system.

“These are amongst the effects to be watched from unexpectedly large climate change impacts. It is worth keeping in mind that carefully designed adaptation policies can reduce the chances and impacts of major shocks.